Wednesday, April 23, 2008

Pharmaceutical Centers of Excellence

The practice of using tertiary hospitals to handle particulary complex medical and surgical cases is long-established. The idea is that best results and minimized risk are achieved by concentrating in a limited number of locations highly sophisticated resources for handling complicated cases.

The same general concept is spreading to other areas of healthcare. For instance, I recently worked on a case study for an education session set up for a conference of directors of molecular labs designated "centers of excellence" by a pharmaceutical company supplying equipment to them for diagnostic and therapeutic testing.

More recently, I had a look at "Rebuilding the R&D Engine in Big Pharma," an article by Jean-Pierre Garnier, CEO of GlaxoSmithKline, in the May 2008 issue of the Harvard Business Review. In the article, Garnier explains his recommended approach for restoring satisfactory productivity to pharmaceutical companies' R&D units. The fundamental change  already instituted at GlaxoSmithKline  is establishing R&D centers of excellence, each focused on a family of related diseases (e.g., Alzheimer's and other neurological diseases). The centers of excellence are "designed to improve transparency, increase the speed of decision making, and restore freedom of action to the scientists actually conducting the research."1

Garnier emphasizes that the centers of excellence must be headed by effective leaders  people who "love the science, show passion in their desire to win, have the resilience to soldier on in the face of multiple setbacks, and genuinely care about the members of their teams." They must also have good decision making ability, notably the ability to make sound decisions on which projects to continue and which to kill, which capabilities and resources to have in-house and which to contract for with partners.

Garnier notes that the approach he recommends, and that GlaxoSmithKline is pursuing, requires companies "to strengthen and expand their ability to evaluate opportunities, negotiate deals, and nurture external scientific bets on a large scale  in other words, to act like a venture capitalist with in-depth understanding of the science at stake."

Though Garnier's article begins with a predictable review of the problems with big pharma's traditional business model, you can skim these first few pages and move right on to the excellent analytical detail in the latter portion of the article.

__________1 Garnier notes that an earlier effort to ameliorate the inefficiencies associated with functional silos (chemistry, pharmacology, clinical development, etc.) by setting up matrix teams did not pan out.